But passage of the California initiative would almost certainly lead to a court battle as major producers of genetically engineered seeds seek to have the new law invalidated. We know this because the Monsanto Company, the largest purveyor of genetically modified seeds, threatened the state of Vermont with a lawsuit should its legislature pass a genetically modified organism (GMO) labeling bill. Though passed 9 to 1 by Vermont's House Agriculture Committee, the bill is likely to die because the legislature goes out of session shortly, too soon, it seems, for the full House to act. Next door Connecticut is moving a similar bill, the fate of which remains open.

Labeling is an existential issue for the GMO industry. Where labeling exists such as in Europe, there is virtually no demand for genetically modified foods. Consumers do not want them. Why? Because the industry cannot demonstrate any benefits for the consumer. The only benefits--large profits drained from farmers locked into the treadmill of buying new GMO seed every year--accrue to the companies. With no demonstrated benefits and lots of questions surrounding the safety of GMO foods, consumers are choosing to play it safe wherever they can knowingly make choices through labeling. It turns out that GMO labeling would be the equivalent of putting a skull and crossbones on a food package or piece of produce, and the companies know it.

That's why in any lawsuit aimed at striking down a GMO labeling law, the companies will seek to limit their argument to a procedural one, namely, that food labeling is the purview of the federal government. (They may also say such a labeling requirement violates their free speech rights. But I doubt if this will fly since governments, state and federal, already enforce many labeling requirements on food.)

The GMO companies will want to focus on the procedural issue of federal supremacy in food labeling for two reasons. First, those companies have a stranglehold on the U.S. Congress and know that it will never pass any GMO labeling requirements. Second, the companies desperately want to avoid any discussion of the substantive issue of "substantial equivalence," the notion, coined by the U.S. Food and Drug Administration (FDA), that GMO crops are basically the same as conventional crops and therefore do not require any special testing for safety.

This is where it gets interesting because it is precisely here where the anti-GMO advocates find themselves on firmer ground. In any legal challenge to GMO labeling laws, those defending the laws could use a legal process called discovery to unearth documents and question officials and scientists at the various companies. What unreleased feeding studies might the defenders find in company files that would contradict the industry's claims? What failed research might they uncover that would shed light on the dangers of GMOs? In addition, there would be no reason why the defenders couldn't also call independent experts to testify about why GMOs really are different from conventional plants and animals, and therefore warrant a label. Who knows? We might even be treated to juicy testimony from an industry whistleblower about falsified test results. This is just the kind of high-profile discussion the GMO industry wants to avoid.

Here is a preview of what we might expect if such testimony were allowed:

When the question of GMO crops first came up at the FDA, the agency's scientists concluded that GMOs were, in fact, different enough that they should be tested in the way that new drugs are tested before approval. These scientists were overruled by the Clinton administration, and the widespread introduction of GMO ingredients into food began.

It is difficult to say who would prevail in a court battle over GMO labeling, one that would almost certainly go to the Supreme Court. Although the current right-wing justices have shown deference to states in most of their opinions, they have also abandon principle whenever sticking to it would inconvenience large corporations--their love of which they announced most prominently in the so-called Citizens United case which has opened the floodgates to unlimited corporate money in politics.

The one thing that the GMO industry does not want is a discussion in the clear light of day of what it is doing and what it is suppressing. And, that is what the upcoming battle over the California GMO labeling initiative and, if it passes, the subsequent court case are going to provide.

P.S. One of the things the GMO lobby is going to claim in the California labeling fight is that requiring labels in just one state will drive up food costs. They will argue that this is because of the added costs of two labels for each product containing GMO ingredients and the costs of segregating properly labeled products bound for California from those going to the rest of the country. I have a simple fix for this: Put the California-compliant label on all products containing GMOs regardless of destination!

I'm preparing to be astonished should the food companies follow my suggestion.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.

Sunday, April 22, 2012

The world's elites don't want to admit it. But the kind of global village that they have insisted on building--a vast free-trade paradise run by an ever more complex and opaque system of logistics and finance--isn't working, not even for many of them. The cost of maintaining this brittle, complex system and keeping the huge imbalances it creates at bay is becoming dizzyingly expensive.

The consequences of those imbalances include heavily indebted countries such as Greece being driven into penury by the financial masters of Europe desperate to keep the Eurozone intact. They include an unsustainable system whereby the United States borrows from China to maintain U.S. consumption of cheap Chinese goods. (Most of that money has been recycled through mortgages on homes which were then used like ATMs in the past decade via waves of refinancing.)

The imbalances also include huge and growing inequality between the income and wealth of the few at the top and the rest of us. It's a truism in economics that if too much money gets concentrated into the hands of a few, precious little is left over for broad-based consumption by the mass of people except by means of greater indebtedness. And, that's what has happened. People have simply borrowed through the home mortgage machine and using credit cards to maintain their standard of living. Now, they've reached the maximum and are shedding debt. Deleveraging is what the economists call it.

As it turns out, those ill-tempered investors are mostly banks in more solvent Germany and France. The bailouts for Portugal, Ireland and Greece were really bailouts mostly for French and German banks. On the other hand, what is the point of having a system in which governments go to the private markets for loans if the banks they charter don't buy the bonds. Europe set up a system that was bound to fail. Germans export goods, lend money to Greeks, Italians, Spaniards and Portuguese to buy them, and fail to think about how these people are going to pay them back. Ditto France. The export model cannot be universally practiced. Somebody has to import stuff. It's a system that produces a kind of prosperity for all until it doesn't.

In the United States economic distress has led to newly strident calls to build a fence from San Diego to Brownsville, Texas along the Mexican border. A world with free movement across borders when jobs are hard to find is no more appealing to Americans than it is to the French or the Germans.

The decision by the people of Iceland not to burden themselves with paying back European depositors who got stung when Iceland's banks failed strikes me as a nascent withdrawal from the constraints of the current global system. Iceland's decision seems premised on the notion that the integrated global financial system has benefitted only those at the top of financial institutions at great cost to Iceland and the poor European depositors lured there by high interest rates.

Ireland is the counterexample. The government there insisted that the people of Ireland take on nearly all of the country's failed bank obligations (owned mostly by nonresidents) which were far out of proportion to the size of the Irish economy. Ireland's decision to bear such a burden in order to stay within the Eurozone my prove pointless if Spain follows Greece into default and contagion spreads across the continent breaking up the Eurozone anyway.

Everywhere the costs of integration are starting to outweigh the benefits for the broad mass of people. Partly this is the structure of such integration which is designed to benefit the wealthy at the expense of the middle class and the poor. Partly such integration is fighting the tide of constrained energy availability. It is no accident that doubts about global integration are surfacing as oil prices hover around $100 a barrel. Cheap transportation is the backbone of global integration, and cheap transportation is fast becoming history.

Of course, at the level of local activists, there is a smorgasbord of efforts to make local resilience a priority in food, transportation, housing, education and commerce. But, not every aspect of the global village needs to be jettisoned. Ironically, the Internet has proven to be a powerful tool for sharing ideas across wide expanses about disengaging from an untenable global system. As our economic and resource difficulties intensify, look for more people calling for changes that disengage their countries and communities from the worst aspects of the global system.

When people at the very top of society begin to call for a withdrawal from the global system, even if only a partial one, you can be sure that many of the brightest and most energetic people down below have already figured out the advantages of doing just that. This is not really a call for complete isolation--just a call for a return to relations that are genuinely reciprocal and consistent with the energy limits which will govern our lives from now on.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.

Sunday, April 15, 2012

Some people seem to have a knack for hopping aboard a trend just before it ends. Cheniere Energy Inc., owner of the largest liquefied natural gas (LNG) import facility in the United States, appears to be a case in point. In the world of finance, Cheniere would be what is called a contrary indicator, one that suggests that a trend is about to reverse.

In late 2004 when Cheniere received federal approval to construct a new LNG import facility at Cameron Parish, Louisiana, most experts believed U.S. natural gas production was already entering a long-term irreversible decline. Imported LNG would be needed to meet natural gas demand in the coming years. Named Sabine Pass, the facility received its first LNG cargo in April 2008 near the tail end of the last natural gas bull market. Prices peaked above $13 per thousand cubic feet (mcf) just two months later. It would have been a supremely good time to short everything related to natural gas. In the months that followed Cheniere's stock price collapsed.

So, Cheniere is reversing course. It is now building an export terminal at Sabine Pass and another one in Corpus Christi, Texas. Trying to put a good gloss on its wasted investment in import facilities at Sabine Pass, Cheniere tells investors on its website that it is "currently developing our proposed liquefaction project at our Sabine Pass terminal which would transform the terminal into a bi-directional LNG processing facility." Why anyone would simultaneously import and export LNG from the same facility is not explained.

The company's enthusiasm results from claims that the United States now has a 100-year supply of natural gas. That enthusiasm is shared by investors who seem unbothered by the actual data. The 100-year claim derives from an industry estimate of total resources, a significant portion of which will never turn into actual reserves. There is no evidence to suggest that all these resources will be both technically recoverable and economically profitable.

Proven U.S. reserves amount to only 11.5 years of consumption at 2010 rates. If we include proven and probable reserves, the number is 22 years, hardly a figure that inspires confidence that there will be adequate supplies available for export in the coming decades. In the same linked piece author Art Berman, a petroleum geologist and consultant who has carefully studied the state data for U.S. natural gas production, concludes that all major natural gas producing areas except Louisiana appear to be peaking in their rate of production. These include "Texas, Louisiana, Wyoming, Oklahoma, Gulf of Mexico Outer Continental Shelf, and New Mexico [which] account for roughly 75% of U.S. natural gas supply and, therefore, provide a useful proxy for total U.S gas production."

It is worth quoting Berman at length to get the flavor of his analysis:

For several years, we have been asked to believe that less is more, that more oil and gas can be produced from shale than was produced from better reservoirs over the past century. We have been told more recently that the U.S. has enough natural gas to last for 100 years. We have been presented with an improbable business model that has no barriers to entry except access to capital, that provides a source of cheap and abundant gas, and that somehow also allows for great profit. Despite three decades of experience with tight sandstone and coal-bed methane production that yielded low-margin returns and less supply than originally advertised, we are expected to believe that poorer-quality shale reservoirs will somehow provide superior returns and make the U.S. energy independent. Shale gas advocates point to the large volumes of produced gas and the participation of major oil companies in the plays as indications of success. But advocates rarely address details about profitability and they never mention failed wells.

Shale gas plays are an important and permanent part of our energy future. We need the gas because there are fewer remaining plays in the U.S. that have the potential to meet demand. A careful review of the facts, however, casts doubt on the extent to which shale plays can meet supply expectations except at much higher prices.(my emphasis)

The entire piece should be required reading for anyone involved in energy policy or who is thinking about investing in anything related to natural gas. The upshot for investors is that natural gas prices are likely to recover much sooner than most analysts are predicting. Gas rig counts in North America tumbled from 906 during the first week of November to 624 last week. This is the lowest number of gas rigs deployed since 2002. As the count continues to fall, new production capacity will slip in the face of a 32 percent annual production decline rate. That's not a typo. The U.S. must now replace one-third of its natural gas production capacity each year just to stay even. Shale gas wells contribute to much of the problem with a first-year decline averaging 65 percent and a two-year decline rate around 80 percent.

The rotary drills will only return to the shale gas fields when prices reach levels that are actually profitable which Berman estimates to be at least $4 per mcf for existing plays and up to $9 per mcf for some new ones. What this implies is much slower growth in supplies, something anticipated by the U.S. Energy Information Administration in its 2012 Annual Energy Outlook which projects that natural gas production will rise from 24.2 trillion cubic feet (tcf) in 2011 to 27.7 tcf in 2035, hardly a bonanza. Still, the EIA buys into the idea that the United States will become a net exporter of gas in 2021.

But Berman is skeptical believing that shale gas supplies will prove so challenging to extract that the country will find itself importing natural gas for a long time to come. If that's so, then we can look at Cheniere's decision to build natural gas export terminals as the perfect contrarian sign that U.S. natural gas prices are nearing their lows and will rise in the years to come.

The U.S. Congress and federal regulators may yet rue the day that they approved natural gas export terminals. Since such terminals typically enter into multi-decade contracts to ensure that they can recoup their costs, natural gas may be going out of the country just when domestic supplies are needed the most.

Cheniere expects its liquefaction plant, which liquefies natural gas by cooling it to -260 degrees F, to start operating in 2015. If that year marks the beginning of a sustained climb in U.S. natural gas prices brought on by increasing strains on domestic supplies, Cheniere will retain its usefulness as a contrary indicator. Increasingly expensive domestic gas may then result in small profit margins or even losses for exporters such as Cheniere. Between now and then, however, the hype surrounding U.S. natural gas supplies and LNG exports may help enrich a few Cheniere investors who are savvy enough to cash out before reality catches up with the company's stock price.

Disclosure: I have no investments related to Cheniere Energy Inc.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.

Sunday, April 08, 2012

In virtually every institution in human society, we humans concern ourselves with the continuation of the species. We have children, we raise them in some sort of family, we educate them for the world of work and citizenship, and then we see them couple and start the cycle all over again. All the while we seek to defend ourselves from disease, violence, economic deprivation, in fact, anything that might cut short our lives or those of our children. It ought to be self-evident that human beings do care about the future. What I want to examine is whether they should and if so, how much.

For this I will need to take you through some simple thought experiments which will test just how much you might do for the sake of human continuity and just how far into the future you might project your own responsibility.

It is a truism that parents concern themselves with the well-being and happiness of their children and grandchildren (and great grandchildren if they live that long). So, a concern about the general state of human society will extend two or perhaps three generations into the future or roughly 50 to 75 years. After that, it's hard for us to put a lot of emotion into making things right for people we will never know.

But let's say you have an altruistic streak that transcends time. You actually believe that people you will never meet deserve your consideration now. You believe that you should leave them a society that makes a good life possible, however you conceive of that good life. How far into the future will this concern carry? 100 years? 1,000 years? 10,000 years? I sense your commitment fading the further out in time I go. After all, how can any of us possibly foresee what human life will be like in 10,000 years (assuming humans survive that long)? How can we even conceive of what a good life will look like then?

Now, let me throw a little cold water on your warm-blooded altruism. Let's say that today we as a global society decided to do everything we need to do to create what is roughly speaking a sustainable society. This would include ending our reliance on fossil fuels, adopting organic farming techniques, letting go of consumerism as an organizing principle, harvesting renewable resources only at the rate they can be renewed, gradually but drastically reducing population over time until it is below the Earth's carrying capacity for humans, and creating a cradle-to-cradle resource management system for all finite resources. Certainly, this list could be expanded. But the point is that the system we create could, in theory, be bequeathed to humans for as long as there is a planet Earth.

Now, what if at some point, say, 500 years into this grand experiment, a society arises that decides all these rules on what we can and cannot do should be repealed, especially the restriction on burning fossil fuels? So, today we make great sacrifices to move from a doomed society to one that is sustainable out of concern and respect for future generations. Then, some future generation blows it by undoing everything we've done. How's that for slap in the face? Except, of course, you won't be around to actually feel the slap. Still, this thought experiment forces us to confront a very ugly possibility and question how much we should sacrifice now for a potentially ungrateful and lethal generation in the future.

Now, let's go even further into the future. Let's say humans remain responsibly sustainable indefinitely. How long will that be? Well, the fossil record suggests that mammalian species such as humans have an average lifespan of 2 million years. So, if we date humans using the classification Homo sapiens, then we are a young species, perhaps 200,000 years old. If we date humans back to the beginning of the entire genus of hominids at least 4 million years ago, then humans are essentially in evolutionary overtime.

But no matter what time line you use, one thing remains true: The chances that we humans will defy the logic of the fossil record seem slim. Some 99 percent of all species that have ever existed on Earth have disappeared. We are very unlikely to evolve into some superior being that carries on the traditions and cultures of humans. We are much more likely to go extinct at some point no matter how sustainably we live as a species.

And finally, let's assume that somehow future humans evolve and adapt so well that they are alive billions of years from now. At some point, our Sun will expand as part of its death throes and consume the Earth. No more life at all on Earth at that point. (I know some of you are saying that perhaps humans will populate the stars. I see no realistic prospect that humans could actually do this even if they could find Earth-like planets. First, the distances would likely be so great that even highly advance spaceships would still take so long to reach such planets that the chance of survival would be small. Second, the Earth-like planet would almost certainly have micro-organisms that would kill humans almost as soon as they landed. Instead of the Andromeda strain coming to us, we would go to it.)

As I've lengthened the time line, no doubt you've found yourself wondering why any of us today should be concerned about the sustainability of human society in a future that is so vast that it is several orders of magnitude longer than human civilization has so far existed. Good question. The continuity of human beings simply cannot be guaranteed indefinitely into the future regardless of what our genes, our minds, or several hundred Star Trek episodes may tell us. We are largely powerless in that regard.

Now, I am not minimizing the impulse to make the world a sustainable place for our progeny. I recognize that as a very strong drive. And, it is one that is featured in countless environmentally-oriented appeals. But I am looking for bedrock here. Is there a way of thinking about sustainability that doesn't involve the inherently impossible task of seeking to assure human continuity indefinitely into the future? I think I have an answer.

Sustainable practices must be in and of themselves a path to a good life. If that's the case, then they are worth implementing simply because they lead to happier and more fulfilling lives. We can take a cue from the simplicity movement which embraced simple living as more fulfilling. Let me illustrate. I ride my bicycle for most of my errands and for exercise as well. Even if there were no climate change problem, even if there were no peak oil problem, even if there were no sustainability crisis, riding my bicycle would still enhance the quality of my life. I'm more fit. I'm more in touch with my physical surroundings. Typically, I'm still moving when traffic is halted. I can get closer to my destination. I pay no parking fees. I find myself now in a kind of universal brotherhood with every other cyclist on the road (a very underrated plus). I could go on. But I think it would be possible to say something similar about any practice that is truly sustainable.

I'm not suggesting that we give up on the rhetoric of creating a sustainable future for our children. But I am suggesting adding to that pitch that almost everything we call sustainable would make us happier even absent the problems we are trying to solve. That means people would ultimately have no regrets about adopting sustainable habits because, in general, they give us a fuller, more compelling life.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.

Sunday, April 01, 2012

It is one thing to read about the fight over the environmental effects of hydraulic fracturing or fracking that are associated with natural gas drilling in deep shale formations. It's quite another to see that fight captured on film. The documentary film Gasland provides a compelling, if one-sided, portrait of the devastation visited on the lives of those who live closest to the drilling.

What a huge mistake it was in retrospect for a natural gas driller to approach filmmaker Josh Fox with an offer to lease his land for drilling. Fox decided to look into the matter carefully, and his research led to the making of Gasland. "Know your audience" might have been a good piece of advice for the natural gas industry. Fox certainly knows his. His portraits of people whose health has been damaged and whose rural homesteads have been turned into houses of horror sited on nightmarish landscapes can only move viewers to pity and indignation. In keeping with the dictum that every action has an equal and opposite reaction, the film has also moved the entire natural gas industry to rage.

No one from the industry agreed to be interviewed in the film; Fox gives viewers a long list of those who turned him down. I think they didn't trust him to be fair. But as any good public relations consultant will advise, that shouldn't have prevented the industry from making its case. It may have been that the industry feared it was running up against someone who actually knew what questions to ask.

As a close observer of the oil and gas industry, two things struck me about the film. First, the people most directly affected by natural gas drilling tend to be rural and of meager means. Because there are so few of them, they will never make up an electoral force on their own able to compel increased regulation of the industry. And, they have few options when their land, home and health are affected. Frequently, suing isn't one of them. Leaving is a difficult option since after their property has been stigmatized by the proximity of drilling, the land becomes more difficult to unload at any price.

Second, the film mentions the explicit exemption of hydraulic fracturing from the Safe Drinking Water Act, an exemption written into the 2005 Energy Policy Act. I've known about this exemption for a long time. And, obviously the exemption makes it cheaper to drill for shale gas since drillers are not obliged to follow federal water regulations. But the nature of those regulations as they relate to hydraulic fracturing was only made clear to me recently in a conversation I had with an environmental consultant to the oil and gas industry.

He said that one way to solve the controversy surrounding hydraulic fracturing of natural gas wells would be to treat them as hazardous waste injection wells which for obvious reasons are subject to the toughest regulations of any kind related to drilling. Such wells are designed to inject liquid hazardous waste deep into the ground into strata far below any drinking water.

Watching the emissions and pollution resulting from the drilling and production operations shown in the film, I realized why the explicit exemption was inserted into the Safe Drinking Water Act. It occurred to me that the federal regulation of hydraulic fracturing operations by the U.S. Environmental Protection Agency might have resulted in the determination that fracturing fluids are hazardous waste. That would turn fracked natural gas wells into hazardous waste injection wells. Such a classification would make shale gas wells not just a little more expensive to drill, but tremendously more expensive to drill. And, that would mean that natural gas from shale would only come out of the ground at much, much higher prices.

The United States has based its power and economic vitality on cheap energy. The exemption was adopted to help keep energy cheap, knowing that it would not be if shale gas wells were extremely costly to drill.

Because most of us now live in cities, we may be unaware of the size of America's shale gas formations. Vast areas of Pennsylvania, New York and Ohio have shale gas beneath them. Large parts of Texas, Louisiana, Arkansas, Colorado and Wyoming do, too. Gasland takes viewers on a shale gas roadtrip across the country to this new sub-territory within the country, a territory for which the rules that apply to the rest of us have been rewritten for the oil and gas industry. The people we meet have persistent headaches, breathing difficulties, newly acquired asthma, unexplained pain which now racks their bodies, and myriad other symptoms. Their ignitable water shoots flames when lit, the air smells of volatile hydrocarbons, and their animals, both household pets and livestock, don't always look so healthy.

Whether all of this is due to the pollution of their air, water and land by natural gas drilling and production cannot be easily proven. The shale gas boom hasn't been going on long enough for long-term studies to say for sure how serious the public health effects will be. Testing that is only now starting to be done suggests the effects will be profound. And, the damaged people whom we meet in the film give living witness to just such a possibility.

What America has done time and time again when it wants a valuable resource is convince itself that either its methods for getting it are surely safe or at least up to the industry standards, in other words, the best we can do. That then seems reason enough not to delay the profits that will follow. What is left behind is, in reality, a "sacrifice zone," an area and its people who are simply sacrificed for what is perceived as the greater good or sometimes just the greater greed.

Gasland is part of an American journalistic tradition of showing us this truth about ourselves. If you watch this movie and come out simply disgusted, you have missed the point. If you want to stop the devastation, you must take the first step yourself; you must turn down the gas. As long as we buy into the myth that we must have ever more energy to live well, we will be hostage to the energy giants who perpetrate this myth. Forcing them to extract natural gas and other fossil fuels more safely would be wise, but we should understand that it would mean smaller supplies and thus higher energy prices.

Ultimately, what we need to do is move away from fossil fuels altogether. After all, none of the people in Gasland would be suffering the maladies we witness if they were living next to solar panels or wind farms instead of shale gas wells.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.